The acronym KYC is short for Know Your Customer, and refers to the regulatory obligation for financial institutions to identify their clients before allowing them to use their platform.
Does Crypto Need KYC?
The recent introduction of KYC has become one of the biggest regulatory obligations crypto exchanges have had to implement in recent years. It is believed that enforcing KYC compliance would help in tackling malicious or illegal activities within the crypto space.
However, given the decentralized nature of cryptocurrencies which are designed to allow customers to remain anonymous and keep their personal information private (especially from any central authority), this has become a conflict with regulatory authorities.
While all centralized exchanges now do require KYC, many decentralized exchanges are still able to offer their customers anonymity.